Why CPG Brands Are Getting Personal

June 08, 2019

The following is republished with the permission of the Association of National Advertisers. Find this and similar articles on ANA Newsstand.

In a consumer packaged goods (CPG) industry struggling to keep up with a rapidly changing marketplace, today's food, beverage, and personal care brands are all vying for an edge — anything that'll give them a leg up on the competition and a foot in the door with an ever-elusive consumer.

CPG brands lament that Americans aren't just changing the way they eat, drink, and shop, they're also changing their minds, constantly. Studies portray modern shoppers as fussy, flighty, lazy, and self-obsessed: They care more about ingredients than brand names, increasingly prefer buying CPG products online, and, according to one analysis of consumer tendencies, have become so narcissistic that brands are having to rethink their entire marketing plans, soup to nuts.

"Ultimately, we're all self-centered," says Barb Stuckey, president and chief innovation officer at Mattson, a Silicon Valley–based food and beverage innovation firm that boasts a who's who roster of CPG clients. "Anything tailored to the individual is highly appealing. That's why customized products are the fascination of everyone in the industry."

Call it customization, personalization, or product tailoring; Stuckey calls this accelerating trend a problem for the CPG sector. The industry, after all, was built on high-cost manufacturing and razor-thin margins with products that are made-to-stock, not made to order.

So, how's a CPG brand supposed to appeal to the masses in an era that's "all about me"? For marketers on the hook, there are four trends in personalization.

1. Personalized Experiences

Tours of the Jim Beam Distillery in Clermont, Kentucky, conclude with a visit to the bourbon maker's American Stillhouse where guests can buy a number of premium bottles. For a small fee, folks can personalize their purchases with an onsite engraving service.

"It's a crowd favorite," says Rob Nelson, senior director of U.S. marketing at Jim Beam. "Customization has become more popular than ever as consumers look for discoverable products that come in limited editions or small quantities."
A personalized Jim Beam bottle, engraved at the bourbon company's "American Stillhouse." The bottle, which commemorates the Urban Bourbon Half Marathon, features customizable text for a runner's name, race time, and date. Courtesy of Jim Beam

But even without an existing retail footprint, CPG makers can build meaningful consumer experiences. In 2017, for example, Mars Wrigley Confectionery began situating Skittles-branded vending kiosks in movie theaters, bowling alleys, and shopping malls. The kiosks, which now number more than 150 nationwide, invite consumers to "create your own rainbow" by mixing and matching multiple Skittles flavors.

"Our kiosks are more technologically advanced than the average vending kiosk, and we are taking advantage of the data they provide," says Jayesh Shah, director of new business development at Mars Wrigley, who adds that these high-tech kiosks drive 150 percent better sales than the traditional, unbranded machines. "In addition to detailed sales analytics, we can analyze sales volume by Skittles flavor, key times of day, and other operational metrics."

2. Personalized Content

Targeted advertising has been a part of the internet experience since the late 1990s. While custom ads are nothing new, some companies are standing apart with highly personalized content, served up on their own marketing platforms.
Skittles-branded vending kiosks allow fans to personalize mixtures of their favorite flavors. Mars Wrigley Confectionery began testing the kiosks in late 2017 and now has more than 150 across the U.S. Courtesy of Mars Wrigley Confectionery

Take the newly retooled recipe site from Kraft Heinz, which features 60,000-plus interactive recipes, an advanced product finder and user shopping cart (both synced to local stores), along with a host of customizable options designed to destress meal prep for busy parents.

The My Food and Family site (formerly "Kraft Recipes") fits perfectly with the company's "personalization at scale vision," says Eduardo Luz, who left his position as global brand officer and U.S. CMO at the Kraft Heinz Company in May 2019.

He adds that advanced technology is the key to customizing content for the masses: "Historically, companies were forced to choose between personalized experiences that required manual effort or scale-type offerings that treated huge segments of consumers the same. We are finally at a point where the technology available to us in areas like machine learning can deliver on that elusive goal of creating individualized experiences for tens of millions of consumers within a few hundred milliseconds."

3. Personalized Packaging

Jim Beam's Rob Nelson says consumers are "especially interested in localized products that represent their specific community or local sports team," and that the trend will continue to grow. He notes the brand has seen quick sellouts of its custom bottles, including the "Game 7 Batch" taken from barrels that matured on November 2, 2016, the day the Chicago Cubs won the World Series.

Until recently, however, few CPG makers considered the higher cost of custom packaging worth the trouble. For decades, supermarkets stocked their snack and cereal aisles with regionally relevant boxes and seasonal packaging that did little to reverse declining sales.

Then came the now-iconic "Share a Coke" campaign in the summer of 2014 — a moonshot for the U.S. beverage sector. By personalizing bottles with 250 different given names on its labels, the Coca-Cola Company saw its sales pop that year for the first time in more than a decade, the Wall Street Journal reports.

Every year since, Coke has upped its customization game, adding a slew of new first names and then last names to packaging, and even an e-commerce shop where consumers can personalize messages on packaging. Last year, Coke turned its nameable labels into stickers so consumers could recycle the bottle but keep the memory.

Oana Vlad, a brand director for Coca-Cola Trademark at the Coca-Cola Co., recently told AdAge that the "Share a Coke" campaign is taking this summer off to make way for "Enjoy," a new bottling scheme that turns labels into "seasonally themed" peel-away wristbands. Share a Coke is slated to return later in 2019, continuing its stretch as the most iconic customized packaging campaign in CPG history.

4. Personalized Products

Most CPG brands employ a one-size-fits-all manufacturing approach for good reason. Mattson's Stuckey, whose firm has helped bring hundreds of food and beverage concepts to market, says it's almost impossible to achieve product customization at scale.

"Coke identified the top 250 millennial names and customized 250 labels, which is an efficient way to personalize at scale," she says. "That's a very different proposition than running 250 different product formulas on the same line. Coke would never attempt that."

Indeed, most CPG plants would grind to a halt under the strain of dozens (forget hundreds) of different formulations. But not all. Truly scalable CPG personalization requires nimble manufacturing, hordes of reliable data, and, most important, a rock-solid e-commerce strategy.

A New Look for Beauty and Personal Care

New York City–based Prose checks all three boxes. The e-commerce startup, launched in late 2017, promises "custom hair care, bottled just for you." Online, consumers fill out a detailed 25-point questionnaire, which generates a personalized haircare recommendation with custom ingredients such as honey, sunflower seed oil, and jujube bark.

Bottles of shampoo and conditioner start at $25 each, but Prose co-founder and CEO Arnaud Plas says his manufacturing system will be fully automated by end of year, making it possible to churn out 30,000 personalized products per day. He expects this development will shrink production costs and, eventually, lower consumer prices. For now, customers in the premium segment are willing to pay more for a brand that will stop at nothing to understand what makes them unique.

"Look at the evolution of commerce," Plas says. "People have been overwhelmed with options. In the beauty space, brands can now eliminate the burden of choice, and make life simpler, by helping to identify the best and only product for each person."

A Marketing Diet for the Food and Beverage Sector

The consumer's desire for a simpler life is a psychographic challenge most food and beverage brands have yet to solve. That's largely because people have no idea what they're supposed to eat.

Each year, according to the Washington Post, an estimated 45 million Americans start a new diet, switching from Keto to Paleo to oh-no-here-we-go-again. One week, dairy's in, the next week, it's bone broth. In a recent New York Times op-ed, physician-scientist and bestselling author Eric Topol explains that there's a central flaw in America's eat-right obsession. "There are no dieting universals," he maintains, and therefore, "A good diet … has to be individualized."

The Nestlé Wellness Ambassador program in Japan is offering just that: individualized products and nutrition tips to help consumers achieve a healthy lifestyle, individually.

Here's how it works, according to a Nestlé spokesperson: Wellness ambassadors receive a free NESCAFÉ Dolche Gusto machine that accepts 17 different kinds of milk, matcha (tea), and smoothie capsules, each packed with just-for-you nutrients across four categories:

Personalized matcha drinks with a range of different vitamins and minerals

Kale and fruit smoothies

Fortified milk options

Milk with functional ingredients for healthy aging

To determine the appropriate concoction, consumers partake in an app-based diet analysis and can, if they wish, take a DNA and blood test, both of which are carried out by independent third parties.

The analysis tells consumers about gaps in their nutritional intake and which capsules and diets fill those gaps. Meanwhile, the DNA/blood testing flows into the diet recommendations (e.g., more whole grain, lower carbohydrate intake), according to Nestlé.

With data in hand, consumers sign up to receive their customized capsules and recipe recommendations through the Nestlé Japan e-commerce platform.

Of course, why limit food personalization to humans? In the U.K., Nestlé recently took a majority stake in tails.com, a website with custom pet food offerings, while Purina in the U.S. owns justrightpetfood.com, a place for personalized pup food.

Both e-commerce platforms punctate a broader CPG trend toward online sales: Last year, online purchasing represented 64 percent of the total growth in U.S. CPG sales, according to a study by the data and predictive analytics firm Information Resources Inc.

Picking the Right Path

Whether personalization is a passing fad or the future of CPG depends on which expert is talking. Marketers, entrepreneurs, and researchers are torn on the subject.

"I think customization is the future, but far, far in the future," Stuckey says, adding that there's no reason for brands to take a wait-and-see approach. "If someone is going to win 15 years from now, they need to start today. Winning is going to take a lot of tech, and a lot of trial and error."

Arnaud Plas, who was VP of digital and e-commerce strategy at L'Oréal USA before starting Prose, says brands need to know their audience and collect a lot of data before they take the plunge. "Talk to your customers and uncover the best data inputs to decide whether you should personalize and how you're going to personalize," he says. "There's a huge opportunity in medicine, food, and beverage, but you have to talk to your customers first."

For a more skeptical take on product customization, ask Howard Moskowitz, Ph.D., the 75-year-old psychophysicist who's credited with inventing the "extra chunky" line of Prego, an achievement made famous in Malcolm Gladwell's TED Talk, "Choice, Happiness, and Spaghetti Sauce."

Moskowitz, president and chief scientist at Mind Genomics Advisors, knows a thing or two about what consumers really want. The man whose research methodology also gave birth to the zesty pickle, the electric toothbrush, and the cash-back card, says there's an empirical means for discovering just about any relevant CPG product variation. But not all companies, CPG or retail, know what to do with a good idea once in the marketplace. Exhibit A: the paint category.

"If you don't know the rule of color mixing, you stock every damn color. The smart company stocks paints that can be mixed on demand," he says.

Perhaps more important, Moskowitz adds, brand executives shouldn't put job or market pressures ahead of business basics. "Don't confuse a fad, like 'I gotta get a promotion, so I'm going to launch ginger-flavored pickle juice,' with a real opportunity," he says. "Rationalizing the (product) line, now that's a grand slam."